Endo International plc – Ordinary Shares (NASDAQ:ENDP) just raised the price on its pipeline drug, Vasostrict, a polypeptide hormone indicated to increase blood pressure in adults with vasodilatory shock, now considered ENDP’s largest selling product in its generic segment. The drug is the only vasopressin injection on the market with FDA approval to restore blood pressure in cases of vasodilatory shock.
On the heels of the raise, Morgan Stanley analyst David Risinger weighed in on the stock, reiterating a Neutral rating, with a price target of $15, marking a 20% downside from where the shares last closed. For Risinger, Vasostrict’s price increase notes a trend- a trend that might help Endo rebound for 2H results. As of July, January, and last April, management has continued to increase the price on Vasostrict from 96% to 19% to 20%.
Management has expressed as of first-quarter, Vastrostrict contains a run rate “in excess of around $300M.” Accordingly, Risinger evaluates Endo’s operating income before the most recent price to be somewhere in the range of over $240 million.
Risinger comments, “Endo faces financial difficulty, but Vasostrict (approaching 20% of est. operating income) should deliver strong results and help results.” The double-edged sword of this price increase means that with potential for an accelerated 2H ramp will also likely bring scrutiny. Based on IMS sales, Endo’s first quarter brought in revenues around $150 million. Endo has an objective to reach its earnings per share (EPS) split objective of 39% for 1H and 61% by 2H. Risinger believes this added price increase could help achieve these goals. The scrutiny Vasostrict attracts in assuming this potentially advantageous risk lies in the fact the drug is geared for an emergency hospital setting.
With a recent announcement indicated an Orange Book patent, Endo investors should be expecting a delay of generic entry. A positive for Endo, Risinger details an upside to the risk, “Par acquisition could drive greater EPS accretion than we model, the base business proves more resilient than expected, generics restructuring leads to a more profitable business than expected, brands could grow faster than expected, Belbuca launch could be more successful than we anticipate, and future M&A (likely through equity) could boost shares higher.”
Yet, Risinger looks to the future to see if basic generics business will continue to face the pressures of increasing prices and whether “earlier-than-expected competition” will come into Vasostrict’s ring. Until then, Risinger cautiously awaits to survey how Vastostrict’s situation will unfold.
According to TipRanks, three-star analyst David Risinger is ranked #1,786 out of 4,101 analysts. Risinger has reached a success rate of 58% to date, and averages 1.2% in his annual returns. When recommending ENDP, Risinger averages 6.5% in profits on the stock.
TipRanks analytics exhibit ENDP as a Buy. Based on 13 analysts polled in the last 3 months, 5 rate a Buy and 8 maintain a Hold. The consensus price target stands at $27.36, marking a 51% upside from where the stock is currently trading.
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